The old adage goes that you have to spend money to make money, but Sony might be taking it to the extremes. The company has reportedly upped its projected losses in the game division for the fiscal year that ends March 31, 2007, to an estimated $1.71 billion. This is nearly twice what Sony had previously stated.The drastic increase is being blamed on the “additional costs of PlayStation 3,” according to Sir Howard Stringer, the company’s CEO.
The additional costs also are partially blamed on Sony’s move to favor its Japanese customer base only with a discounted PS3 coming out of the gate. The home-turf favoritism isn’t winning the company fans in other regions, nor is its failure to deliver on the planned worldwide launch.
Meanwhile, Microsoft’s still taking a beating with costs associated with the Xbox 360. The company’s numbers look better a year after launch, but they’re far from being in the black.
Microsoft’s game division has lost $96 million in the July-September quarter, which is an improvement from $173 million during the same period last year.
Keep in mind, losses in the games and devices divisions for both companies are expected. It does cost money to make money. The real cash cow is not in the device sales, but in the games that follow.
However, $1.7 billion equates to a whole lot of games. Between this and the battery issue, it will be interesting to see if Sony can pull up and out as time rolls by.
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